When the Spot and Forward Exchange Markets Are Not in Equilibrium

question 51

Multiple Choice

When the spot and forward exchange markets are not in equilibrium as described by interest rate parity, the potential for "riskless" arbitrage profit exists. This is called

• A) covered interest arbitrage (CIA).
• B) interest rate parity.
• C) the Fisher Effect.
• D) dancing on the head of a pin.

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Definitions:

Lymphocytes

Lymphocytes are a type of white blood cell that plays a central role in the immune system, helping protect the body against infection and disease.

Epinephrine

Referred to as adrenaline, this substance acts as both a neurotransmitter and hormone, essential for the fight-or-flight mechanism in the body.

Cortisol Levels

A measurement of the concentration of cortisol, a hormone released by the adrenal glands in response to stress.

Serotonin

A neurotransmitter that plays a role in mood regulation, sleep, appetite, and cognitive functions.